Nvidia soars after results and tops $2.5 trillion in stock market value | Financial markets

No one can stop Nvidia. The company, founded in 1993 in a California fast food restaurant, has become the king of artificial intelligence in the stock market thanks to its powerful microprocessors. Following the presentation of results and forecasts that exceeded expectations, the company’s shares rose 9% on the stock market this Thursday shortly after the opening of the session. At the same time, it reaches a valuation of $2.55 trillion and becomes the third most valuable company in the world, behind only Microsoft and Apple. It’s already worth more than Amazon and Tesla combined.

Shares opened the session at $1,020.28, topping $1,000 for the first time. During the first hour of the session, they notched an all-time high of $1,042.60 per share, representing a 9.8% increase from Wednesday’s close. The rise was larger than expected on Wednesday outside normal trading hours. Nvidia announced a split (split) each share by 10, which will reduce its par price, “to make the shares more affordable for employees and investors,” as he explained. From an economic point of view, this is a neutral operation, but it is generally well received by the market. Nvidia also announced a dividend increase of 150%, from 4 cents to 10 cents per current share.

Thanks to Thursday’s gains, Nvidia shares are up 115% this year and 237% in 12 months. That’s the market’s star value in a race that accelerated just a year ago with forecasts that stunned analysts.

The company, led by 61-year-old Jensen Huang, released results for its first fiscal quarter (February to April) on Wednesday. Revenue soared 262% to $26,044 million (about 24,070 million euros at current exchange rates), while profits increased more than sevenfold, rising from 2,043 to 14,881 million, up 628%, beating analysts’ expectations. The company said it expects revenue of about $28 billion for the second quarter and a gross margin of 74.8%, also above market expectations.

Analysts welcomed the results. Bank of America raised its share price target to $1,320 ($132 post-split), so it still sees significant overvaluation room. At this price, Nvidia will surpass Microsoft and Apple to become the most valuable company in the world.

“Not only is Nvidia growing its sales faster than any other large-cap stock (first-quarter sales were up 262% year-over-year), but it also generates an FCF (free cash flow) margin of over 57%. At this rate, Nvidia could generate over $120 billion in free cash flow over the next two years and over $200 billion in free cash flow over the next three years, creating a strong growth case,” Bank of America analysts say, highlighting their financial strength . invest and protect your competitive position. “According to Nvidia, every dollar of investment generates customers five dollars in hosting revenue over four years, which is a strong return on investment,” they add.

For the investment firm, Nvidia is the first choice in the sector due to an “unprecedented combination” of a number of factors. Among them is a turnkey system project that they believe can support a market share of over 80% in the AI ​​accelerator market, which could double annually to reach $100 billion in 2024, doubling from new to $200 billion in 2027 and reaching $300 billion or more in 2030. In addition, they value Nvidia’s dominant position across a broad range of customer verticals and consistent execution of the roadmap that drives the transition to Blackwell’s next-generation ultra-powerful computing platform, as well as sustainable network growth.

Lewis Grant, manager of the Federated Hermes fund, notes that Nvidia’s results “exceeded our wildest expectations.” Grant highlights the potential of artificial intelligence, noting that “while current monetization is firmly tied to infrastructure, it’s hard to deny that the basis for building something special exists.” However, he urges caution as “not all AI developments will change the world and the industry.” Despite this, “the key to success is trust, and Nvidia’s results continue to be euphoric,” he says.

The data center business continued to be a revenue driver in the first quarter, with $22.563 million, more than five times the year-ago figure. The division already accounts for 87% of the company’s turnover, up from 60% in the first quarter of last year. Growth in the microprocessor and data center computing platform business is driven by strong and growing demand for generative AI training and inference on the Hopper platform, the company said. Beyond cloud service providers, generative AI has spread to consumer internet and enterprise companies, automotive, healthcare, and even governments, creating multiple multi-billion dollar vertical markets. Nvidia says it’s ready for the next wave of growth.

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